soft currency

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Related to Soft Currencies: Sound money, Safe Haven Currency, Strong Currencies

Soft currency

The money of a country that is expected to drop in value relative to other currencies.

Soft Currency

A currency that fluctuates in value frequently. Soft currencies are generally issued by governments that are less stable and/or have weaker economies than stronger currencies. As such, most soft currencies come from countries in the developing world. Central banks rarely hold reserves of foreign soft currencies as they do little or nothing to stabilize the local currency. A soft currency is also called a weak currency. See also: Strong currency.

soft currency

a FOREIGN CURRENCY that is in weak demand, but in abundant supply on the FOREIGN EXCHANGE MARKET. This situation usually arises when a country is in persistent balance-of-payments deficit. Compare HARD CURRENCY.

soft currency

a FOREIGN CURRENCY that is in weak demand but in abundant supply on the FOREIGN EXCHANGE MARKET. Soft currency status is usually associated with an economically weak country that is running a large deficit in its BALANCE OF PAYMENTS; the supply of the currency is high to finance the purchase of imports, but demand for the currency is relatively weak because the amount of it being required for the purchase of exports is much lower. Under a FLOATING EXCHANGE RATE SYSTEM, however, the demand for, and supply of, the currency should be, in theory, brought into balance by a DEPRECIATION 1 in its EXCHANGE-RATE value. Compare HARD CURRENCY.
References in periodicals archive ?
Many African currencies count as 'soft currencies', whose value on the exchange markets fluctuates (see Guyer 2012), so there is a logic to circulating them rapidly and converting them quickly upward into other money forms, commodities, symbolic forms and/or relationships that have more durable value.
Saving money in a soft currency is insane and the dollar has been the mother of all soft currencies since the 1960s.
These points include: (1) understand the differences between using spot and forward market rates, (2) recognize that vehicle currencies are more readily convertible thin1 soft currencies, (3) consider market forces that cause currencies to fluctuate, (4) recognize an opportunity to hedge a transaction, and (5) understand some of the ,services available from banks to assist in the management of foreign exchange risk.